TN Historic Tax Credit
Knox Heritage and the East Tennessee Preservation Alliance support the establishment of a state-level historic tax incentive for Tennessee. Some of your favorite historic places in Knoxville have benefitted from federal-level historic tax incentives, including the Tennessee Theater, Knoxville High School, and the Farragut Hotel. It could make the difference between saving and losing a historic building important to your community.
- Thirty-five states, including all eight that surround Tennessee, offer historic tax credits to help revitalize Main Street communities, create jobs and put vacant historic buildings back on the tax rolls.
- Historic tax credits encourage the rehabilitation of smaller historic buildings in rural areas as well as those in larger towns and cities.
- Studies find that one-third of the state’s investment in historic tax credits is paid back during the construction phase and the remainder is paid back between four to nine years after the renovated building is put into productive use once again.
- These tax incentives are used to rehabilitate only certified historic buildings and are not issued until State Historic Preservation offices certify that the work meets the Secretary of the Interior Standards of Rehabilitation.
- A new report by the National Trust details how these incentives encourage downtown revitalization. https://forum.savingplaces.org/viewdocument/report-on-state-historic-tax-credit
Support is growing among small business owners, mayors, developers, Main Street supporters, preservationists, architects, and others for a Tennessee historic tax incentive that includes the following:
- 10% credit for Williamson and Davidson counties
- 20% credit for Knox, Hamilton and Shelby counties
- 30% credit for other counties in the state
- Main Street Incentive: an additional 5 percent credit will be available for historic rehabilitation projects in state-approved Main Street, Tennessee Downtown communities and smaller Certified Local Governments.
- Applied against state taxes owed and certificates issued by the state that could easily transfer to entities with more state tax liability or allocated within a partnership as defined by state regulations
- A capped program, with a per-project cap, to ensure many rehabilitation projects are spurred across the state
RESOURCE CENTER: Main Street Historic Tourism and Revitalization Act
WATCH – Johnson City TV coverage: https://bit.ly/2E8Fngx
WHAT YOU CAN DO
- Contact your legislators and let them know you support this initiative. Find yours HERE. See if your state Representatives and Senators would be willing to co-sponsor this legislation. If so, they should reach out to Senator Watson & Rep. Vaughan to get added to the bills.
- Get local resolutions passed by towns like Bristol.
- Request that local and county mayors write/call/e-mail Governor Lee asking him to include this incentive in his budget.
The bills were introduced! The Main Street Historic Tourism and Revitalization Act
SB 1053 by Rep. Bo Watson
HB 1063 by Rep. Kevin Vaughan
Former Senate majority leader Senator Frist has been working to raise awareness about the possibilities a state HTC could have for TN.
- Similar appeared in Commercial Appeal paper
- And yesterday in Forbes magazine – https://www.forbes.com/sites/billfrist/2019/02/04/the-tax-credit-that-is-history-in-the-re-making/#56bd16681246
FREQUENTLY ASKED QUESTIONS
Q: Would this piggy-back on the process for applying for the federal historic tax credit?
A: Yes and using the same process, the Tennessee Historical Commission could also qualify a project just for state historic tax credit using the Secretary of the Interior Standards for Rehabilitation.
Q: Is this limited to commercial/income-producing properties?
A: Yes, this new incentive we’re hoping to get adopted would only be for commercial properties and moreover, the state’s investment wouldn’t happen until the private dollars had been spent getting the building rehabbed and put back into service.
Q: Is this similar to last year’s bill?
A: Yes, this is also a historic tax credit like last year but the way this would be set up is that ½ of the credits are reserved for use in those areas that are eligible for the 30% credit for 9 months. After nine months, the credits would be available to those in the other counties. Also, we’re proposed a capped credit (seeking $40M total with a $4M per-project cap so a single project like Crosstown Concourse in Memphis would use up all of the credits).
Q: How does this work in other states?
A: West Virginia offers $30M a year in tax credits, while Alabama offers $20M in credits. Texas, which also doesn’t have an income tax, offers a state historic tax credit. Read a recent report from the National Trust https://forum.savingplaces.org/viewdocument/report-on-state-historic-tax-credit for more details including a case study on the Texas state historic tax credit. Every other state surrounding TN has a state historic tax credit (see attached map).
Q: Is this limited to exterior renovations?
A: Interior renovations would also qualify but the key is that the proposed work needs to be substantial or 50% of the adjusted basis value of the property.
Q: My building owners don’t pay insurance tax, so how could they use this credit?
A: Our goal is to get a credit taken against multiple taxes so that even if your property owner doesn’t owe that type of taxes, there are others either in the community or elsewhere in the state that would have tax liability and would want to get their hands on the tax credit certificate.
Q: Where do I go for talking points?
A: The attached two-page legislative summary has good talking points and so does the recent report we just released (see above). You can also quote Ronald Reagan! See what he had to say about Main Street, his hometown of Dixon, IL and historic tax credits. https://www.youtube.com/watch?v=yMtvk0o4FVk&feature=youtu.be
Q: Didn’t I hear there was a webinar on this?
A: Yes, to watch (or re-watch) sign up here https://attendee.gotowebinar.com/register/5907420185282802945